Question
This game involves three players, Jay, Jill, and Mo, and a host who runs the game. The three players are located in separate rooms and
This game involves three players, Jay, Jill, and Mo, and a host who runs the game. The three players are located in separate rooms and have no way of communicating with each other. Each player is given $90 and the option to either put the $90 in an envelope or to keep it. The game host then collects the envelopes and adds $60 to each envelope in which she finds $90.
The host and the two players then congregate in another room, where the host dumps the contents of the envelopes on a table, and splits the money on the table evenly between the three players. All of this is explained to Jay, Jill and Mo before they go into their separate rooms to make their choices. Jay and Jill are a happily married couple who always share their money equally, and Mo is totally selfish. (a) Construct a strategic form for this game. (b) Find all the Nash equilibria of the game. (c) Find all the Pareto-optimal strategy.
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